`Crony capitalism' outlined at conference

Irish capitalism was structured around "a series of informal alliances and families" who operated in specific sectors of the economy, Dr Kieran Allen of UCD's sociology department told a weekend conference in the college on "Understanding Class in Ireland".

Most had close political links and operated "either as monopolies or oligopolies", he said. "An obvious example is Cement Roadstone, but a similar point might also be made about the banks." They had gained enormously from partnership agreements which ensured salaries were payable directly through the banks, he said.

"The result has been a 570 per cent increase in profits at the Bank of Ireland since 1990 while AIB profits have grown from £65 million in after-tax profits for 1987 to £535 million in 1997," he said.

Irish capital placed special emphasis on access to Ministers and State officials, he said, and recent revelations about AIB writing off the debts of two former taoisigh underlined this. Therefore, the attempt by tribunals to establish a one-to-one relationship between money donated and specific measures pushed by politicians would seem to be misplaced, he said. The relatively compact nature of capital in this State meant "a high degree of crony capitalism had sprung up in Ireland". Crony capitalism existed in almost all capitalist economies, he said.

It used private money to gain favours and massive funds to elect co-operative politicians. Experience in the United States had shown how it led to law being circumvented through deals between politician and lobbyist, and that the focus tended to be on winning tax loopholes.

In Ireland the failure to look at the broader context had forced tribunal judges into slightly "bizarre psychological explanations", Dr Allen said.

Thus Mr Justice McCracken concluded that Ben Dunne's motive in giving money to Charles Haughey "was simply to buy friendship, or at least the acquaintance of a person in a very powerful position". Dr Allen pointed out, however, that when the Dunne family's settlement trust expired in 1985, the Revenue Commissioners had sought £30 million in capital gains tax from them.

This was overruled by the Revenue Appeals Commissioners, a decision the Revenue Commissioners decided against appealing to the courts.

The McCracken Tribunal found that the only request for special favours Ben Dunne made of Charles Haughey was for a personal meeting with the chairman of the Revenue Commissioners. But the tribunal also heard that Mr Haughey had discussed Dunnes' tax affairs with the then chairman of the Revenue Commissioners.